Attorney Malpractice Insurance Innocent Insured Clause
The Innocent Insured Clause provides coverage for individual firm members for deliberate acts excluded from coverage providing that those individuals had no knowledge and/or did not participate in the acts. For instance, if one firm member embezzled client money, the embezzlement act excludes coverage because it is a deliberate criminal act. But there may be other firm members sued for malpractice that did not know or participate in the embezzlement. The insurer provides coverage for the other firm members that did not participate in the embezzlement.
The Core Pointe Insurance Policy’s Innocent Insured clause is as follows:
“B. Innocent Insured
Whenever coverage under this policy would be excluded, suspended, or lost because of the exclusion relating to dishonest, fraudulent, criminal, or malicious act or omission by any person insured hereunder, the Company agrees that such insurance, as would otherwise be afforded under this policy, shall be applicable with respect to an Insured who did not personally participate in such act or omission and otherwise complies with all terms and conditions of the policy.
The Company’s obligation to pay damages hereunder will be excess of the full extent of the assets of any Insured involved in such dishonest, fraudulent, criminal, or malicious act or omission.”
This common clause found in most professional liability Insurance policies. It is also a clause that is frequently litigated.
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Lee Norcross, MBA, CPCU
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L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
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